Back when I had more time (and only one child), I sold these capes on my etsy shop.
I make these similar to the way I make the bibs, except there is no batting between the fabric, and I use about a yard of fabric (of each color).
I use snap or ties to hold the cape in place. The snap option is better on my mommy conscience...no strangling.
This one was a shop favorite. I made a lot of these guys (not the cute red head...the pirate cape).