I was looking for a better way to grip my S-Pen without modifying it, and stumbled upon this perfect fit.
Step 1: Get a Uni-Ball Signo Gel 207 Bold
This is the model that fits the S-Pen perfectly.
Unfortunately it seems to be difficult to find them in small packages, but given that Samsung's S-Pen Holder is around $50, buying 12 pack would still see you ahead. Since one of the great things about this phone is the compact package, it would be nice to make several and leave them where convenient: work, home office, car, etc.
Step 2: Test Your Fit First
Test the fit by unscrewing the tip, removing the ink cartridge, and inserting the S-Pen into the open end. It should be a tight fit, but it should still move.
I've had some slight variance between individual pens, and I picked the fit I liked best for my primary use caddy.
Step 3: Size It Up and Chop!
Figure out how much of the S-Pen you want sticking out the end, and see how much of the pen body you need to use it comfortably.
Remember that if you're using your only S-Pen (not an extra), you should plan on taking it in and out of the S-Pen holder/caddy easily, so make sure you have room to grip the S-Pen to remove it.
Once you have your cut point, simply place it on a hard surface, and roll a knife over it so it cuts around the body. Keep it up with increasing pressure and you should get a smooth even cut.
Step 4: Enjoy!
Write, draw, and sketch for extended periods in comfort and with more control!