When do you use apostrophe S and S apostrophe?

Today’s question: When do you use apostrophe S and S apostrophe?

Jennifer asks:  I was taught, growing up, that you only use apostrophe-S when it is a contraction as in “John’s going home” as in “John is going home” and S-apostrophe for possession.

Was I taught incorrectly?????

How do you distinguish between possession and contraction in the following sentence: ” The man’s nuts.”

Does it mean “The man is nuts.” ?

Or is it reference to his testicles? How can you tell?????

Help!