How to install macOS Big Sur update on a Parallels VM?
See https://github.com/rtrouton/create_macos_vm_install_dmg for a way to create a Big Sur installer disk image. For this to work, you need to download the Installer app onto your main Mac, run the script to create the disk image and then run Parallels with that image to create a Big Sur VM.
Performance may be rather unsatisfactory though, you might be better off with installing Big Sur on an external drive or separate partition, and boot from there.