It is possible to take a test drive with the Parallels Desktop 16 Technical Preview.
Parallels Desktop 16 Technical Preview Program has been launched by Parallels for those using M1 processor based Mac models.

The company says it has developed a new virtualization engine that uses the Apple M1 Mac chip hardware-assisted virtualization to allow users to run ARM-based operating systems, including Windows, in a virtual machine.

This first version comes with some restrictions. According to this:

It is not possible to install or start an Intel x86-based operating system on a virtual machine.
It is also not possible to suspend and resume a virtual machine, and return to the “working state” snapshot.
The “close” button cannot be used while a virtual machine is running, you have to shut down the virtual machine instead
ARM32 applications do not run in a virtual machine
With these limitations, it is possible to use the ARM version of Windows on an M1 Mac using Parallels Technical Preview. Microsoft is not selling a version of Windows that will run on Apple Silicon Macs with Parallels, but the company has offered a version for Windows Insider Program members.

The company also underlines that they are focusing on expanding Parallels’ capabilities in M1 Macs.

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