The background color (Stage color) of a SWF file can be set to transparent. The background color or image of the HTML page that contains the SWF file shows through. This technique allows layering of SWF content with DHTML (Dynamic HTML) content.
Not every web browser handles transparency in the same way. Be sure to test your SWF file in all browsers that you want to enable your audience to use. Most Linux browsers do not support Flash transparency. This table lists several browsers that support transparency.
The HTML for a SWF file can be created using the Publish Settings feature in Flash. The Publish Settings dialog box provides an option to affect the WMODE setting. The options selected in the Publish Settings are added to the HTML source code automatically.
Choose File > Publish Settings. Make sure that HTML is selected.
Select HTML.
Choose Transparent Windowless from the Window Mode menu to make the SWF file's background disappear in browsers that support this feature.
Publish the document.
This video shows how to perform these steps in Flash Professional:
