Why can't $module be used as a variable name in jq?

Is this behaviour of jq, w.r.t the non-allowed use of $module as a variable name, specified anywhere?

$ jq -n --arg 'module''X''$module'jq: error: syntax error, unexpected module, expecting IDENT or __loc__ (Unix shell quoting issues?) at <top-level>, line 1:$module jq: 1 compile error

My expectation is that jq would print "X", but this is not the case. Why?