The hat is red and white with the words "Foxy Grandpa" written in bold dark red letters on the front.
Role in episode
After Mr. Krabs finds out that the Soda Drinking Hat is worth a lot of money, he buys a bunch of hats to trade SpongeBob for the Soda Drinking Hat. One of those hats is the Foxy Grandpa. SpongeBob declines the hat since, according to him, it was "a little boring." Krabs thought the hat would get him for sure.