In a medium bowl, toss the shrimp with olive oil, chili powder, garlic powder, cayenne pepper, salt, and black pepper. Let marinate for 15 minutes.
While the shrimp is marinating, prepare the watermelon, red onion, cilantro, and avocado. In a large bowl, combine the watermelon, red onion, cilantro, and diced avocado.
Heat a skillet over medium-high heat. Add the marinated shrimp and cook for 2-3 minutes on each side, or until they are pink and opaque. Remove from heat.
Add the cooked shrimp to the watermelon mixture. Squeeze lime juice over the salad and gently toss to combine.
Serve immediately, or chill for 15-20 minutes to enhance the flavors before serving.