I need to modify the legholes of the leotard for my Cammy cosplay, but I have a feeling it may go horribly wrong. Does anybody have any tips on sewing stretchy fabric? Do I need a certain kind of thread maybe?

Sand-which the fabric between tear away interfacing while you're stitching it. This gives the machine something grip and stops the fabric from stretching. Then you can just tear it away when you're done. If you want to maintain stretch use a zig zag stitch.

That said, I nice way to finish the edge might be to use bias binding. It depends what you're trying to do with it.

Stretch stitch!! Most sewing machines have this, or a zigzag option at least, so that's the first thing you should be looking for. Serging the seam will also help (you can do this with the zigzag stitch if your sewing machine doesn't have the option, it just takes a little patience).

I had the problem where my machine wouldn't actually sew the spandex (assuming that's the material you're talking about), so I changed the needle to a ballpoint, played with the tension on the bobbin, and I also stuck the fabric between a bit of interfacing which I could pull away after, and it sorted it right out!

Oh, and you'll need a lot of patience, haha.

Good luck!

Stretch needle, zig zag stitch, lower setting on machine and then tracing or tissue paper to put either side of the fabric worked wonders for me.

I recommend playing about; my machine has no stretch stitch setting, so I just figured it out until it worked ;p