This is a cool way to create a knit stocking. This can also be used to make a sweater or an ugly sweater if you ever needed to. This is a simple pattern effect, it takes a bit of time to select each shape and fill it with a color but the end effect is quite festive.
Start with a red rectangle.
Duplicate the shape and rotate it so the left edges line up at the same point.
Use the Direct Selection Tool to select the two lower corners of the rotated shape and pull the Corner Widgets in to round the end.
Draw a line over the intersecting point of the shapes. Select both shapes and the line and use the Divide Mode in the Pathfinder Panel
Select the shapes and use the Shape Builder Tool to merge the lower shapes together.
The use the Shape Builder Tool to merge the upper shapes together. Ungroup the lower shape and the upper shapes so they can be selected individually.
To create the knit effect draw a line and add a heavy stroke weight.
Use the Width Profile from the drop down menu to create a line that tapers at the top and bottom.
Rotate the shape 30 degrees.
Duplicate the shape and rotate it 30 degrees in the opposite direction,
Select both shapes and choose Object > Expand Appearance. Then use the Pathfinder Unite mode to make them one shape.
Duplicate the shape to the side using Option/Alt and drag the shape. Once the shape is duplicated, use COMMAND + D to continue to duplicate the shape many times (40-50 times).
Select the row of duplicated shapes and use Option/Alt and drag the row down to duplicate the row. Use COMMAND +D to duplicate the rows several times.
Select the upper part of the stocking and click on the Draw Inside Mode at the bottom of the tool bar. Copy a section of the knit pattern.
Paste it into the shape and click on the Draw Normal mode.
Select the lower part of the stocking and click on the Draw Inside Mode at the bottom of the tool bar. Paste in the knit pattern and rotate it at the same angle as the lower section.
To edit each shape in the knit pattern, double-click on the upper shape to enter into Isolation Mode. A gray bar will appear at the top of the open document. In the Layers panel, the top layer will show Isolation Mode. Click on the triangle (the twirly) to the left of the layer to open the layer up. Lock the Clipping Path layer to make it easier to select each knit object without selecting the shape they are clipped in.
Select the knits shapes and change the fill color to create a pattern. Use different colors and select different pieces to create any pattern look.
This is not a quick process. Select each knit a shape, hold SHIFT to select more knit shapes. Create any pattern you want.
Repeat the last few steps for the lower section.
Add a top rounded rectangle to the stocking. Repeat the Draw Inside process and paste the knit pattern inside. Add a colored rectangle to the lower section below the cap.
Set the opacity to 60% and the blend mode to Multiply to make it look like a drop shadow below the cap.