The Ellipse tool allows you to draw a circle or ellipse. Simply click and hold down the mouse, drag until you get the size ellipse you want, then release the mouse button.
The stroke width option allows you to specify how thick of a border you want, while the current Stroke Color will be used for the color of the ellipse's border.
Elements drawn with the Ellipse tool can be filled with either a solid color or a gradient. You can also apply a drop shadow to ellipse elements, as well as bevel/emboss them, or add a glow to it.