After releasing the 30-year-old at the end of his contract in June, Allardyce moved to bring former Chelsea man Cole back to Upton Park in October amid a striker shortage and he has since scored three times in 10 Premier League games.
His efforts have not been able to prevent West Ham from slipping into the bottom three, where they currently sit three points from safety.
Andy Carroll is expected to make his long-awaited return from a foot injury in January but, with Cole's current deal also likely to end this month, Allarydyce wants to keep his options open.
"We've got that in mind and are talking about that as quickly as we possibly can because obviously it needs to be addressed," Allardyce confirmed.
"Carlton will be dealt with very shortly."
If Cole opts not to extend his stay at Upton Park, QPR could be a potential suitor with manager Harry Redknapp recently revealing an interest in the forward.
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