After Fred's speech, there are four options: It is up to the Sole Survivor to decide Jules' fate. Jules is distraught the whole time and tries to convince Fred to free him so he could go to Bunker Hill.
Shocked and angered, Fred holds Jules at gunpoint and threatens to kill him, fearing that the runaway synth would send the Institute after them.
They probably created a friendship during that time, which made Jules feel secure to reveal his true identity.
