Spark happens right when the points contacts bein to open.. Electrical contact between them is broken and you get spark.
And this is supposed to happen as the piston rises and is very close to the top of it's stroke.
Notice the letters "T and "F" stamped on the flywheel.
There's also an alighment mark close to the flywheel's edge, on the engine case itself.. it's near the base of the cylinder.
Align the "T" with the case-mark. The piston is at the top of it's stroke.. Top Dead Center. TDC
Back the flywheel counterclockwise a little bit and the "F" will align.
This "F" alignment says the piston is a few degrees Before TDC.. BTDC..
And this is where Honda wants the points contacts to crack open and spark to occur. At the "F"
As a preliminary check, slip a piece of cigarette paper between the points .. a thin strip of ZigZag .. or rip open a cigarette.
Align the "T" (piston is at TDC)
The points should be open. The paper easily slides in and out.
Turn the flywheel countercloclwise. Watch the "F" mark. When that F mark aligns with the case-mark, the contacts should just close. The paper is now stuck.
Turn the flywheel very slightly clockwise and the paper is free again.
If this is the case, timing is really close .. double check it with a timing light .. i use this cheap inductive timing light connected to a spare 12V battery, while the engine is running.. works nice.
If the above situation is not the case, loosen the points hold-down screw.
Then use a flat screwdriver in the adjustment slot (to the right of that screw) to leverage the points body one way or the other.
Setting the maximum point opening (called the gap) also determines ignition timing.
And adjusting the points-body position (and therefore gap) is the only method available to set ignition timing on this bike.
Move the flywheel clockwise, a bit beyond the "T" mark.
Notice that there's a gap between the points contacts. Measure that point gap with a feeler gauge.
Gap should be around 0.35mm or so (0.014 inch)
Move the points body till this gap is about 0.35mm and tighten the points hold-down screw. That's it.
An alternative is to use a timing light. Adjust the points body and test with the light. Re-adjust if needed.
Search this forum or google for info about timing lights and how to make and use them.