The answer to this riddle is a "hug." The riddle is describing something that can be wrapped in your arms and held in the palm of your hand, which refers to a hug. The statement "I love mine and you love yours" suggests that everyone enjoys receiving and giving hugs. Lastly, the phrase "Nothin' says lovin' like something from the oven" is a play on words, implying that a hug can be a warm and comforting gesture, similar to something freshly baked and comforting from the oven.
