What causes the halo or ring around...

Halos (larger circles) around the Sun can be caused by the refraction (bending) and reflection of light in ice crystals in the clouds. Sometimes these halos will show color like a rainbow. You might also see two “mock suns” (also called “parhelia” or “sundogs”), one on each side of the Sun. If you see a smaller rainbow circle around the Sun, this might be a corona (not the same as the corona we think of in the Sun’s outer atmosphere), caused by the diffraction of light through water (and sometimes ice) droplets.