The first time Nick sees Gatsby when going back home from a party at the Buchanan house. He notices Gatsby mysteriously standing on the lawn with his hands stretched forward. It seems like he was watching the stars, but then it becomes clear that he glazes at the green light. Nick is thinking about whether he should introduce himself to the new neighbor.
Detailed answer:
In the first chapter, Nick got invited to dinner at his cousin’s Daisy place in East Egg. After the evening, he goes back home to the West Egg, where he meets Gatsby for the first time. Nick sees Jay Gatsby standing on his lawn daydreaming. The man is looking at the green light that comes from Daisy Buchanan’s house located on the other side of the pond. Daisy is the former lover he once lost. And wistful glances at the other side demonstrate Gatsby’s desire to get his beloved woman back. The light is too far for Gatsby to reach it, which carries a special meaning.
It symbolizes how impossible it is for him and Daisy to be together again. She is married to Tom Buchanan, a rich and well-educated man. He is from an upper-class family suitable for Daisy’s social status. Gatsby is no match since he comes from a poor background with no connections.
While Nick is observing Gatsby, it appears to him that “the green light” does not belong to his friend any longer. As the reader finds out further in the story, Gatsby hosts large parties with great shows inviting almost everyone. It is all done with the only purpose – so that Daisy attends his event, and he can see her again.