Heat sugar and water in a small saucepan over medium heat to melt the sugar. Continue cooking and swirling the pan until the sugar turns amber in color.
Whisk in heavy cream. The mixture will bubble up violently briefly. Continue whisking until the sauce is smooth.
Whisk in butter and vanilla extract. Use as desired.
Video
Notes
If you would like to make this into a salted caramel, add 1 teaspoon of sea salt at the end.