i don't think there is such an option with 7z. here are the options from the command-line tool:
cmd-line options
7-Zip 4.40 beta Copyright (c) 1999-2006 Igor Pavlov 2006-05-01
Usage: 7z <command> [<switches>...] <archive_name> [<file_names>...]
[<@listfiles...>]
<Commands>
a: Add files to archive
d: Delete files from archive
e: Extract files from archive (without using directory names)
l: List contents of archive
t: Test integrity of archive
u: Update files to archive
x: eXtract files with full paths
<Switches>
-ai[r[-|0]]{@listfile|!wildcard}: Include archives
-ax[r[-|0]]{@listfile|!wildcard}: eXclude archives
-bd: Disable percentage indicator
-i[r[-|0]]{@listfile|!wildcard}: Include filenames
-m{Parameters}: set compression Method
-o{Directory}: set Output directory
-p{Password}: set Password
-r[-|0]: Recurse subdirectories
-scs{UTF-8 | WIN | DOS}: set charset for list files
-sfx[{name}]: Create SFX archive
-si[{name}]: read data from stdin
-slt: show technical information for l (List) command
-so: write data to stdout
-t{Type}: Set type of archive
-v{Size}[b|k|m|g]: Create volumes
-u[-][p#][q#][r#][x#][y#][z#][!newArchiveName]: Update options
-w[{path}]: assign Work directory. Empty path means a temporary directory
-x[r[-|0]]]{@listfile|!wildcard}: eXclude filenames
-y: assume Yes on all queries
and an online example here (http://dotnetperls.com/Content/7-Zip-Examples.aspx).
IIUC, I had a similar difficulty trying to package a plugin for FARR.
What I ended up doing was to have an initial step of cd-ing in to the folder containing what I wanted to have compressed (as mentioned by SirSmiley) and also to have the resulting file created outside of the folder containing the contents to be compressed. What follows is a sketch with some details.
If "test" is the name of the folder containing things to compress, the following is the sort of command line that worked for my case (assuming I run the command in the parent folder of "test"):
cd test && 7z.exe a -tzip ..\test.zip -r .\*
To verify the results, I used the Open menu item in the File menu of 7-zip File Manager on the test.zip file -- I also extracted the test.zip file using the "7-zip" -> "Extract Here" menu item from the Windows Explorer context menu successfully. The version of 7-zip I am using appears to be 4.5.7.
I tried basically what SirSmiley mentioned w/ success too:
c:\test>7za.exe a test.7z -r *
The result was a test.7z file in my C:\test folder -- I also verified its contents using the two methods mentioned above.