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In a large bowl, cream butter and sugar until light and fluffy. Beat in egg and extract. In another bowl, whisk flour, baking powder and salt; gradually beat into creamed mixture. Reserve 1 cup dough.
Tint remaining dough red; shape into a 3-½-in.-long roll and wrap. Tint ⅓ cup of reserved dough green; wrap. Wrap remaining plain dough. Refrigerate 2 hours or until firm.
On a lightly floured surface, roll plain dough into an 8-½x3-½-in. rectangle. Unwrap red dough and place on a short end of the plain dough; roll up.
Roll green dough into a 10x3-½-in. rectangle. Place red and plain roll on a short end of the green dough; roll up. Wrap and refrigerate overnight.
Preheat oven to 350°. Unwrap and cut dough into 3/16-in. slices (just less than ¼ in.). Place 2 in. apart on ungreased baking sheets. Lightly press chocolate chips and, if desired, sesame seeds into red dough to resemble watermelon seeds.
Bake 9-11 minutes or until firm. Immediately cut cookies in half. Remove to wire racks to cool.