Unable to install Monterey in a VM

Hello. I was attempting to install Monterey as a VM this morning. First I didn't see the option in Control Center after downloading the install app file from System Preferences. Then I attempted to install it by using "Install Windows or another OS from a DVD or image file" and after it created a bootable disk image file, it gave me the following error message. My primary OS on my device is Big Sur.

Parallels version: Version 17.1.0 (51516)
Model: MacBook Pro (13-inch, M1, 2020)

 

Our VPN and AV is not compatible yet with Monterey and wanted to test other apps before upgrading the OS. Was hoping to follow the same instructions as

If you want to just create a macOS Big Sur virtual machine, without upgrading your host, quit the "Install macOS Big Sur" application and proceed with steps to install macOS Big Sur from an installation .app;
Install macOS Big Sur in a virtual machine with Parallels Desktop 16