In Friday's second round, Watson fired a 4-under 66. At 4-under 136 overall, Watson has a 1-shot lead over Bob Gilder (66), Morris Hatalsky (67), defending champion Allen Doyle (68) and Mark James (69).
"I hit some quality iron shots and yet I hit some iron shots that were pretty ugly too," Watson said after the round. "It was an adventurous round today; very satisfying round in the way I scored, and that's what I'm out here to do. I had the Watson of old kind of feel today."
Peter Jacobsen (66) is sixth at 2-under 138.