Yes, you do it before throwing it and you hold the stick up. You'll obviously want to hold up right before throwing it since it's the same stick that moves your QB so if you hold up way before throwing your QB will step up in the pocket.
Whether you bullet or lob it mainly depends on the safety, but also depends on the corner. If there's no safety, chuck it deep and let the WR go get it. If there's a safety coming over then you'll wanna fire it in there or else the safety will try to go get it along with the WR. But, if you need to throw a bullet, you also need to watch the corner because he could easily pick it off underneath too.