Create The Masking Shape

We're done with that layer for now, so Insert New Layer:

Let's name these layers now so nobody can say we don't keep our ducks in order:

Long-Press the Rectangle Tool and choose the Oval Tool (keyboard shortcut is o):

IMPORTANT---> Use only a fill color! Do NOT use a stroke:

No STROKE

OK, draw a circle anywhere on the stage:

Now turn on layer masking. Right-Click the mask layer (the top layer) and choose Mask:

Boom! Check out the change in your Timeline. Flash should add some masking icons and automatically lock your masking and masked layers:

...and look at your Stage. The masking shape reveals the layer below: