How do I create a transparent outline for an object where it intersects over another?

[Sofia M R]

Hi, everyone. 

I'm trying to create an image with transparent background that achieves the look seen below (i.e. negative space outlining the ampersand where it intersects with the type):

I have no idea how to go about it. The results above are an illusion achieved by an outline/stroke of the same colour as the background (in this case, white); please see below what the objects look on a transparent background:

Does anybody know what to do here? I've browsed for an answer on-line, but haven't been able to find it.

Thank you in advance!

[Monika Gause · Accepted solution]

Assign an opacity of 0% to the white stroke in the Appearance panel

Group all the elements (red, blue and black/white)

In the transparency panel assign "Knockout group" to the group

You might need to turn on CPU preview.

[Sofia M R]

Hi, Monika!

Thanks so much for taking the type to reply, looks like that's exactly what I am looking for. The white stroke doesn't have an opacity control of its own, however -- I can only change the opacity for the whole type (fill+stroke). Other step-by-step guides are telling me I must click the arrow next to 'Stroke' (in the 'Appearance' panel, that is) to reveal its opacity control, but there's arrow to be seen. Would you have any advice to offer?

Thank you in advance!

[Monika Gause]

You have probably still live text?

Then you need to assign the stroke in a different way. https://youtu.be/LBQXcxasz_0

Aussehen = Appearance

I hope everything else explains itself somehow.

[Sofia M R]

Thank you SO much, Monika! 

[Monika Gause]

You're very welcome, Sofia!

Have a nice weekend!