Choose the size you like and knit a cylinder on a knitting loom or with circular knitting needles (optionally, make a rectangle of which two edges you stich to make a cylinder).
Do not close the top stiches but drag the yarn through them. Then pull the yarn and close the opening on the wrong side.
At this stage add the eyes and the beak (you may add wings as well).
Use the plain blanket stitch to attach the elements.
Now stich the top of your owl with an overcast stich. Remember to stitch dense in order to maximally stretch the top of the owl. Leave a small opening for stuffing. Once the owl is stuffed, close it. Add small tassels on both sides.