The most common and most likely answer to this crossword clue is the 4 letter word ESPY
E
S
P
Y
More clues leading to the result ESPY
Buddy explains!

The straight part
We know that "Observe" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case observe = espy.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does ESPY mean?
ESPY verb- To catch sight of; to see; to spot (said especially of something not easy to see)
- To examine and keep watch upon; to watch; to observe.
- To look or search narrowly; to look about; to watch; to take notice; to spy.