There are probably several different ways of doing so. You might to into Google website where they do all kinds of demonstrations (my mind just went blank on what it's called). The easiest way would be to "envelope" it. Pick a nice velour or velvet - or you could use cotton or any other fabric that you want to. Put right sides together and stitch around it - usually on a sewing machine - stitching right up to the design line and leaving the top edge open. Turn it inside out. Then fold down each side of the top and stitch each side down separately - leaving the opening open.

Or you can use two layers of fabric so that there is a lining directly against the stitching so that it doesn't get pulled or damaged by whatever you put into the stocking.

Just remembered -- it's called YOU TUBE. They have all kinds of demonstrations on how to do things there. My husband even gets some hints on how to fix cars and he's an auto mechanic!

I have made several of these over the years :).

My first step in s to use fusible interfacing on the back of the stitched piece. I use the double sided for stockings, then iron fabric over the interfacing to finish the inside. I fold in the stitched top before adding the interfacing so you don't have that sticking out. Then I carefully cut the stitched piece leaving about a 3" space for the hem. As this has a lot of easing together, it's best to use a stretchy fabric. Felt or knits work well. I then cut a matching piece for the back, put the two right sides together and hand sew.

I've tried machine sewing and it actually did not work as well. I found that it didn't stay together if you use it as a stocking! So I hand sew using a heavy sharp needle and six strands of embroidery floss. I don't use running stitch, as that leaves gaps, but sort of a stem stitch so it is very, very solid. Unfinished top edges can be either hemmed down, or what I like to do when I'm using felt is put a blanket stitch edging at the top.