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This works the same way as the previous two yo-yos!
Decide how large you want your yo-yo to be and cut a square twice that size, plus ½” (seam allowance).
Thread a hand sewing needle with quilting thread or two strands of regular sewing thread. Knot the end of the thread. Fold over about ¼” of fabric for the hem. Take large running stitches (about 4 stitches to the inch) close to the edge, all away around the circumference of the square, folding under the seam allowance as you go. (If your stitches are too small or too far away from the fold line, you won’t get a small hole when gathering the fabric.)
After stitching the square, do not cut the thread. Pull the thread gently until the fabric edges gather in the center. There will be a small hole, with the wrong side of the fabric hidden on the inside of the yo-yo. Pull the thread tight, take a couple more stitches to secure the thread and knot it off. Work the gathers to make the yo-yo lie flat and square.
