Drizzle olive oil into a large pot—just enough to cover the bottom—and add the chopped onion and garlic. Sauté until golden.
Add paprika, tomato paste, and pimenta da terra, and stir everything together.
Add the drained octopus, previously cut into large pieces.
Let the octopus cook uncovered for 10 minutes.
After 20 minutes, add the wine and let it cook for another 20 minutes, or until the octopus is tender. You’ll know it’s cooked when a fork goes in with little resistance.
Then add the peeled potatoes, previously cut into cubes.
Once the potatoes are cooked and easily pierced with a fork, add the chopped parsley. Turn off the heat—it's ready to serve.