Cut the parchment paper to the size of your pot or frying-pan (a rough approximation is fine).
Fold the parchment paper into four.
With either a scissors or simply by ripping, cut across the parallel line as show in the picture twice (once on the side shown and once on the bottom side) (there's no need to be precise).
It should look like this.
Done. It's not so big that is sticks out of the sides of the pot/frying pan, exactly as an otoshibuta should be.
Story Behind this Recipe
I used to use aluminum foil as an otoshibuta, but I read somewhere online that cooking with aluminum is bad for your health (although I can't verify the source) and so I've switched to using parchment paper.
Parchment paper doesn't stick to food, and it's easy to dispose, so it's easy to use. There's no need to be precise in the initial cutting, a rough estimate is fine.