Elastic band found in watch (7)
I believe the answer is:
springy
'elastic' is the definition.
('springy' can be similar in meaning to 'elastic')
'band found in watch' is the wordplay.
'band' becomes 'ring' ('ring' can be a synonym of 'band').
'found in' means one lot of letters goes inside another.
'watch' becomes 'spy' (I've seen this in other clues).
'ring' inserted into 'spy' is 'SPRINGY'.
(Other definitions for springy that I've seen before include "Elastic, resilient" , "jumpy" , "With bounce" .)