How to change a background Image into a watermark by altering the opacity?

string root = Server.MapPath("~");
string parent = Path.GetDirectoryName(root);
string grandParent = Path.GetDirectoryName(parent);
string imageFilePath = parent + "/Images/logo.png";
iTextSharp.text.Image jpg = iTextSharp.text.Image.GetInstance(imageFilePath);
jpg.ScaleToFit(1700, 800);
jpg.Alignment = iTextSharp.text.Image.UNDERLYING;
jpg.SetAbsolutePosition(100, 250);
jpg.ScaleAbsoluteHeight(500);
jpg.ScaleAbsoluteWidth(500);

Please take a look at the BackgroundTransparent example. It is a variation of the BackgroundImage example.

In your code, you're adding the Image to the Document instance. That's OK, but if you want to make such an image transparent, you need to introduce a soft mask. That's not difficult, but there's an easier way to make your background transparent: add the image to the direct content, and introduce a PdfExtGState defining the opacity:

PdfCanvas canvas = new PdfCanvas(pdfDoc.addNewPage());
ImageData image = ImageDataFactory.create(imgSrc);
canvas.saveState();
PdfExtGState state = new PdfExtGState();
state.setFillOpacity(0.6f);
canvas.setExtGState(state);
canvas.addImage(image, 0, 0, pageSize.getWidth(), false);
canvas.restoreState();

You can compare the results of the examples mentioned above to see the difference.

My example is written in Java, but it's very easy to port this to C#.

Click How to change a background Image into a watermark by altering the opacity? if you want to see how to answer this question in iText 5.