Morgan Stanley Finance LLC filed a Free Writing Prospectus to Preliminary Pricing Supplement No. 19,872 on November 2, 2026, relating to Worst-of INDU and RTY Dual Directional Buffered Participation Securities due May 30, 2028.

Key Highlights

  • Issuer and guarantor: Morgan Stanley Finance LLC is the issuer, with Morgan Stanley as guarantor.
  • Underliers: The securities are linked to the worst performing of the Dow Jones Industrial Average (INDU) and the Russell 2000 Index (RTY).
  • Maximum upside payment: $1,202.50 per security (120.25% of stated principal amount), with a 100% upside participation rate.
  • Buffer amount: 15%, with a maximum loss of 85% of principal.
  • Estimated value: $964.70 per security, or within $35.00 of that estimate.
  • Pricing date: November 24, 2026; maturity date: May 30, 2028; CUSIP: 61781TTB9.
  • No exchange listing: According to the filing, the securities will not be listed on any securities exchange and secondary trading may be limited.

Structure and Payment Terms of the MSFL Dual Directional Buffered Securities

According to the filing, the securities are structured so that the payment at maturity depends solely on the performance of the worst performing underlier between the Dow Jones Industrial Average and the Russell 2000 Index, measured from the pricing date to the observation date of May 24, 2028. The filing describes three scenarios: an upside scenario, an absolute return participation scenario, and a downside scenario. In the upside scenario, if the worst performing underlier appreciates 5%, investors receive $1,050 per security. If it appreciates 100% or more, investors receive only the maximum upside payment of $1,202.50 per security.

The absolute return feature means that if the worst performing underlier depreciates by up to 15% (the buffer amount), investors may still receive a positive return. As illustrated in the filing, a 15% decline in the worst performing underlier results in a payment of $1,150 per security. However, losses beyond the 15% buffer are borne by investors. The filing states that if the worst performing underlier depreciates 95%, investors lose 80% of their principal and receive only $200 per security.

The filing notes several risk factors. It states that "the estimated value of the securities is determined by reference to our pricing and valuation models, which may differ from those of other dealers and is not a maximum or minimum secondary market price." The filing also discloses that all payments are subject to the credit risk of Morgan Stanley and that, as a finance subsidiary, MSFL "has no independent operations and will have no independent assets." The U.S. federal income tax consequences are described in the filing as uncertain. Registration Statement Nos. 333-293641 and 333-293641-01 apply to this offering.

What Was Disclosed

Morgan Stanley Finance LLC filed a free writing prospectus summarizing the terms of Worst-of INDU and RTY Dual Directional Buffered Participation Securities due May 30, 2028, including payment scenarios, a 15% buffer, a $1,202.50 maximum upside payment, an estimated value of $964.70 per security, and key risk factors.