Roll out a small piece of clay and cut into a rectangle about 3-4 inches long and 3-4 times as wide as the slot stick. The width will partially depend on how thick the clay slab is. The thicker the slab is, the wider it needs to be in order to wrap around the pencil completely. The slot stick in this demonstration is 1/2 inch wide and the clay slab is about 1/4 inch thick and 1 3/4 inches wide. (3 1/2 times the with of the slot stick)
The clay needs to be quite soft (but not sticky) for this because it will have to stretch when wrapped around the pencil. If it is too hard, it will crack.

Lay the slot stick along one of the long sides of the clay slab about 1/4 inch from the edge. Hold the fettling (potter's) knife (tool #4) at an angle and slice off a strip of clay. (Figures 1, 2) This strip of clay will have three sides. (Figure 3) Flip the clay slab over and repeat on the other long edge.

The clay slab should look like this after cutting when viewed from one of its ends.

Wrap the clay around the round pencil. In Figure 4, the arrows indicate the beveled edges which will overlap. Figure 5 Using a finger, moisten the beveled edges with water and press firmly together to seal.