using the selection's center as the circle's center.
To circularize part of a mesh
Select a set of vertices, edges, or faces on the mesh.
For vertices: You must select at least three vertices. The number of selected vertices will determine the shape of the circularized area (i.e. three creates a triangle, four creates a square, five creates a pentagon, etc).
For edges: Circularize is performed on each closed edge loop.
For faces: Circularize is performed on each set of faces that share at least one common edge.
Select Edit Mesh > Circularize from the Modeling menu set, or Shift + right-click and select Circularize Components.
The selected components are converted into a circle.