First, get a spud gun - mine is two inch PVC and is air powered, but other guns should also work. I shot the spud-a-chute at 55 psi.
Next, get a spud. You will need to pre-fit the spud to the gun by shooting it once, hopefully without too much damage.
Drill a small hole in the spud (about 1/4") from the bottom up, it should go at least halfway up.
Drill a large hole (around 1") from the top down, about halfway down the spud. If you go too far, the spud will not last as long. The two holes should meet so you can see through the spud.
Make a parachute. I used a 4 gallon kitchen trash bag and cut a slit about 4" up both sides. You can also use any square of plastic cut from a trash bag. Take two pieces of string about 24" inches long. Tape the four ends to the four corners of the open end of the bag. This leaves two loops of string hanging from the parachute.
Attach the parachute to the spud: Drop the two string loops into the large hole. Use a thin screwdriver or stick to push them through the small hole. Tie a couple of knots in the end sticking out of the small hole. Pull up on the string so the knots block the small hole.
You now have a spud-a-chute!
Shooting tips:
Put a hole in the top of the chute to help the air escape as you load it. Don't push too much of the chute into the spud or wrap the strings around the chute, it may not deploy. Don't tie the knots in the string too tight, you will want to undo them when you move on to a new spud (Note that the spuds last longer when they parachute gently to the earth) Experiment with how tightly you put the chute in the spud, to get the deployment just right.