This buoy is on the south side of the main channel connecting the East River and upper New York Harbor. [See U.S. Coast Pilot 2, 45th ed., 2016, pars. 270-286] It is a red buoy, telling mariners to keep it on their starboard (right) side as they are heading into the East River from the south.
The buoy is just north of Dimond (or Diamond) Reef, which was a hazard to navigation until the 1850's, when it was reduced by blasting. [See achievements of engineer "Julius H. Kroehl".]
See In The Water for more information on navigating the harbor.