The Reds also activated outfielder Norris Hopper from the disabled list.
The 22-year-old Bailey knew he was likely to be optioned to Triple-A Louisville after he gave up five runs in only 2 1/3 innings of a 9-0 loss to Boston on Sunday. In three starts this season, Bailey went 0-3 with an 8.76 ERA.
The Reds want Bailey to work on throwing strikes with his changeup and breaking pitches. Against the Red Sox, the only pitch he could throw for a strike consistently was his fastball.
Hopper had been sidelined since April 23 with an irritated nerve in his right elbow. He played in six games for Louisville as part of a rehabilitation assignment.