You will need:
A T-shirt that fits well (can be a bit loose)
First you will need to cut off the collar and the sleeves of the shirt as pictured above.
Put the shirt on and mark with a pencil where you'd like the length of the shirt to sit.
Take the shirt off and cut the bottom of the shirt off where you made your mark.
From the piece of the shirt you cut off, cut a 1 inch wide strip.
Now cut each end of the strip open as pictured. You should now have two, 1 inch wide strips.
Gently tug on the strips until they roll into themselves.
Slip one strip through the top of the neckline and through the arm pit of the shirt.
Tie the strip in a knot and adjust the position of the knot until you like the way the cap sleeve is fit. Then tie another knot for good measure to make sure that it won't come out in the wash. Tie the remaining ends into a bow. Repeat on the other sleeve of the shirt.
And you're done! Now you have a super cute cap sleeve top, and you didn't even have to stitch anything together.
Get crafty with it: Try tying just one side into a cap sleeve for an asymmetrical look.