Place pan on medium-high heat and stir the sugar constantly.
As the sugar cooks, it will change from white to a light brown liquid. Lift the pan occasionally from the burner so the sugar does not burn.
The caramel is cooked enough when it has become a bright golden brown color. It will darken a little more before it is changed to syrup, so don't keep it on the burner too long or it will begin to taste burned. When the sugar reaches a light, golden color, remove it from the heat.
Add 1 cup of hot water. It will sputter and make a lot of noise. You may want to wear an oven glove when you pour the water into the caramel to keep hot caramel from getting on your hand and burning you.
Immediately return the pan to medium-high heat and bring it to a boil. Allow the caramel sauce to boil for about 5 minutes.