“I saw the moon . . . and way out away from it there was what seemed to be a perfect circle of light. What might have caused that lunar halo?”
Well, we get a lot of reports of these sorts of observations — halos around both the sun and the moon. They form when ice crystals in high cirrus clouds cause light to be refracted or “bent.” Because moonlight isn’t very bright, lunar halos are mostly colorless — but you might notice more red on the inside and more blue on the outside of the halo.
These colors are more noticeable in halos around the sun. If you do see a halo around the moon or sun, notice that the inner edge is sharp, while the outer edge is more diffuse. Also, notice that the sky surrounding the halo is darker than the rest of the sky.
Moon Light Effects – A ring around the moon