Dreaming about an UFO or extraterrestrial can signify anxiety over an unfamiliar situation, feeling out of place, or a fear of being different. It may also signify a fear of not being open minded enough in your current life circumstances.
The first interpretation is that an extraterrestrial in a dream represents fear and anxiety. In this interpretation, we might be trying to process something that is unknown and which makes us feel afraid or anxious while still being in our comfort zone such as our bedroom.
The other possible interpretation is that an extraterrestrial in a dream can signify potentiality or new beginnings. The second interpretation holds that we might be feeling open-minded and ready for new adventures as seen by the out-of-the-ordinary nature of encountering an alien being while dreaming.