Options have circuit limits too. The lower circuit limit is 0.05. The upper circuit limit undergoes revision based on the movement of the underlying.
Your order which was initially rejected with a check circuit limit rms mesage was later executed at the same price because the upper circuit limit was revised based on the movement of the stock and your square off price was then within this limit.
Yes, market orders are blocked for stock options. This is primarily because of low liquidity in stock options. It is explained with an example here where a stock option market order ensured a loss to the person placing it.
Do note that SL-M orders are also blocked for stock options as it is a market order too.