This tutorial is designed to get you familiar with layers, gradients, and clipping masks. We will be creating an interlocking text effect.
1 First set the text in a appropriate type style. I started with a text size of 140 points. This works great with script type styles, or fonts that have flourishes that can be intertwined. I chose a simple font so the effect can be demonstrated clearly.
2 Next, convert the text to outlines (Text/Create Outlines) and arrange the shapes so they overlap. I extended the lower stroke of the "C"by using the direct selection tool (open arrow) to select the anchor points of the stroke and dragging them across the "O" (hold down the shift key as you drag to keep the lines straight.
3 Next, go to the menu "Object/Path/Offset Path". Type in a value of -.06 (for this text style and size, your settings may be different).
4 Next, fill the shapes with a gradient. The gradient direction is set to 90° for the outermost chapped -90° for the inner shape. I left the strokes on to make this easier to see.
5 Now, select the shapes that appear to be in the back and copy them. Create a new layer and choose "Edit/Paste In Front". Draw boxes on top of the parts of the letters you want to be on top. With the letter and box selected, choose "Object/Clipping Mask/Make".
When both the "C" and the "O" have been masked, you should have the appearance of interlocking letters. The layers can now be flattened and the letters grouped to make it easier to work with the finished graphic.