Giant iguana circles island (7)

I believe the answer is:

antigua

'island' is the definition.
(I've seen this before)

'giant iguana circles' is the wordplay.
'circles' says the answer is hidden in the clue.
'ANTIGUA' is hidden in the letters of 'giant iguana'.

(Other definitions for antigua that I've seen before include "Aga unit in the West Indies" , "holiday destination" , "warm island" , "One of the Leeward Islands" , "Caribbean island linked with Barbuda" .)

I've seen this clue in The Telegraph.

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