Here's a list of what you'll need to get started:
" An small, clean sock (I'm using one my daughter outgrew, I think it's a child's size 5-8).
" A small piece of felt (for the scarf)
" Fine tipped markers (black and orange - I used Sharpies)
" White string
" Cotton balls or a small amount of quit batting
" Food coloring, fabric dye, ink, or some other dye suitable for coloring fabric (I used red food coloring). You could probably even use paint.
Step 1: Step 1 - The Hat
Set the sock aside and let it dry thoroughly. If you're making several ornaments, or plan to do this with a kid, then you can do this step ahead of time and allow the socks to dry overnight.