buy a PUT to protect long position – simple examples

Suppose you bought IBM at $100 but it is $90. You fear it may drop below $80. You can buy a PUT option at $80. It's ITM so premium is at least (spot – strike), perhaps $12/share or $1200/contract. Any premium you pay is likely to go down the drain.

Now suppose you have a lot of USD. You may need a lot of SGD in x months. USD has dropped to SGD1.23, but you fear it may drop to $1.20. You may buy a PUT like the above. The put allows you to convert USD1 to SGD1.20.