Watts was granted permission to speak to other Super League clubs after being told he is not wanted by Craig Sandercock at Craven Park.
McRae said: “There has been plenty of speculation regarding Liam and indeed we have contacted his agent to show an interest in the player.
“There is no doubting his talents and he is certainly a player that will court interest from a number of clubs, particularly with his pedigree as an England Knights player and previously a member of the England ETS group.
“We believe a player of Liam’s calibre and potential will improve our squad and it’s up to him to decide whether he wants to join our club.”
McRae expects a decision from Watts one way or another in the next week or so. However he is refusing to speculate any more on players who may or may not be moving to the KC Stadium.
He said: “There is a lot of talk about a number of players and I’ve had a host of players thrown up to me in interviews in recent days from the media and supporters, but a lot of it is far wide of the mark.”