Allardyce is into the final four months of his deal at Upton Park and according to Pardew, his side's form so far this season may be enough for him to negotiate his own terms.
"Contracts are always a two-way street - it is not just what the club want to offer Sam, it is what options Sam has too," Pardew said ahead of Palace's trip over to east London on Saturday.
"Sam has got himself in a great position - he has had a great season."
But the former Newcastle United boss is well aware that things in football can change rapidly, pointing out that West Ham have slightly dropped off the pace in recent times.
"They've had a great season but that (pressure) is part and parcel of the Premier League," he added.
"Sam knows as well as I did at Newcastle that pressure comes when you lose games."
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