All the methods I saw for keyholes sounded too complicated. Here is a VERY simple method for knitting a vertical key hole without cutting your yarn or starting from the middle of a skein, without adding in a second ball, and without casting on or binding off. I hope it works for you as well as it works for me.
Part 1:
Knit your pattern until you reach the row where you wish to start the keyhole. Knit the row in pattern until you get to the spot where the key hole will be (usually half way).
Part 2:
At this point, turn your knitting around. The yarn feed will be on the left hand needle as it is when starting a new row. Move the yarn to the back and knit in pattern back the way you just came. Leave the other half of the stitches on the needle. Don’t bind off or anything.
Keep on knitting these half-rows and turning around at the keyhole up to the height you want the keyhole to be, enough rows to accommodate what you want to thread through it.
Part 3:
Then you have to start knitting the second half up to the same height as the first half.
When you get to the end of the first half of the row, simply continue the second half of the row (the stitches that had been left on the needle while you built up the first half) in pattern.
Turn at the end of the row and knit back to the key hole. Again, turn your knitting around.
Your yarn feed will be on the left needle. Move the yarn to the back.
There will be a link of yarn between the first half of the key hole and the second half. Loop the left needle front-to-back under the link of yarn and knit this together with the first stitch.
Continue knitting the second half in pattern up to the same height as the first half, picking up the loop and knitting it into the first stitch each time you turn the knitting around.
When the second half reaches the height you wish, pick up the loop when you reach it and knit it together with the next stitch as you continue knitting across the first section. The two halves will be linked together at the top of the key hole as if they had never been separated. Finish the project as you would normally.
You might want to sew around the key hole when you’re done to reinforce it. Use either the same yarn or a contrasting color for a more decorative effect.