If we are discussing a boss, it is up to you of course but we recommend you give your boss the benefit of the doubt, if deserved. This would be for approach number one. If you are not experiencing continuous repeated bad behavior and this is an isolated incident, let it go as long as they did not pass the “this is too offensive” to ignore line. If bad behavior is out of character for your boss, perhaps they are dealing with a personal issue and are not aware that they are managing and exhibiting poor behaviour. If you can figure out what is causing this bad and rude behavior it may help you to deal with it. If your boss is continually going over the line, then you have another set of circumstances to deal with.