3 strips orange zest
2 cups cubed seeded watermelon
3/4 cup white tequila
1/4 cup lime juice
salt or sugar for rimming glasses (optional)
1 lime, cut into wedges
2 cups crushed ice, or as needed
Bring 1/2 cup sugar, water, and orange zest in a small saucepan to boil, stirring constantly. Simmer until sugar is dissolved, about 3 minutes. Remove simple syrup from heat and allow to cool completely.
Place watermelon in a blender or food processor. Pulse until pureed.
Stir watermelon puree into a large pitcher with simple syrup, tequila, and lime juice.
Place a small amount of salt or sugar into a saucer. Rub edge of margarita glasses with a lime wedge to moisten. Lightly dip the rim of the glass into the saucer to rim the glass; tap off excess salt or sugar.